H&M have announced a profit drop of 14 percent for the period of November 2016 to November 2017. This is their biggest drop in profits for the last six years. This result can partly be attributed to their unexpectedly poor performance in their last quarterly figures where their profits fell by a huge 34 percent.
The share price for H&M has also seen a drop of over 9 percent which has taken their share price to a nine year low point. The H&M chief executive, Karl-Johan Persson, has issued a statement saying that all retailers are being challenged by changes to the industry and that he expects this to continue throughout 2018. He added that H&M do not expect to reach their target for growth in sales this year. The sales growth figure had been set at 10 – 15 percent for 2018.
In a bid to improve their financial performance, H&M have announced plans to close approximately 170 stores and to launch a new discount store, Afound, later in 2018. H&M also intend to launch one more independent brand in their stores this year in order to continue attempts to widen their customer demographic.
The retailer will also start to sell the H&M Home and H&M brands on Tmall, which is an e-commerce site, in March 2018.
Although H&M have announced that their dividend to shareholders will remain unchanged, it has been announced that the board of directors is currently considering whether to provide all of their shareholders with the chance to reinvest their share dividend in new shares.
News in the same category
At first read, the headline seems to bode more gloom and doom for the UK retail sector, but all is not as it seems. M&S are in the midst of a major restructuring programme, which has already seen the closure of 35 stores in 2018.
Sainsbury's currently testing a new layout in six supermarkets in the UK. The goal is to make shopping even more easy and fast.
The struggles faced by Marks and Spencer in the competitive UK retail market have been well documented and their most recent economic results have added to their woes.
Luxury Spanish brand Loewe is opening a new flagship store in Bond Street in London. Looking to strengthen its presence in the UK, the new outlet will be set over three floors, with 5,380 square feet of retail space.